1) Background: Schizophrenia is a devastating illness that costs the US over $60 billion per year, mainly due to unemployment, lost productivity, and other consequences of poor functioning. Vocational rehabilitation programs such as Supported Employment (SE) improve psychosocial functioning. However, less than 1/4 of the patients at our facility with a schizophrenia-related diagnosis participate in SE despite its availability. We have developed a new integrated Cognitive Behavior Therapy (iCBT) group therapy protocol designed for low functioning patients with schizophrenia to improve motivation and engagement in psychosocial rehabilitation programs like SE. 2) Objectives: The objective of the current proposal is to evaluate whether iCBT can improve engagement and success in an existing SE program among the most functionally disabled patients with schizophrenia. Our primary specific aim is to determine whether iCBT + SE will significantly improve work outcomes at post- treatment to a greater extent than Psychoeducation (PE) + SE in low functioning patients with schizophrenia. Our secondary aims are to evaluate the whether iCBT + SE will significantly improve work outcomes at 6 month follow-up relative to PE + SE, and whether iCBT + SE will improve functional outcomes post-treatment and at follow-up relative to PE + SE. 3) Research Design: We are proposing a prospective randomized controlled trial with participants recruited from the Philadelphia VA Medical Center (PVAMC). We will randomize 96 patients (48 patients per condition). Assessors will be blinded to participant treatment group allocation. Assessment sessions will occur at baseline, and at 6, 12, and 18 months. 4) Methodology: The study inclusion criteria are as follows: 1) Diagnosis of schizophrenia or schizoaffective disorder, 2) Severe functional disability, 3) At least 90 days since last hospitalization, 4) Receiving treatmen at PVAMC, 5) Minimal engagement in psychiatric rehabilitation services, 6) Ages 18-65, 7) Proficient in English, 8) Able to give informed consent. Exclusion criteria are: 1) Neurologic disease or damage that would make the diagnosis of schizophrenia questionable, 2) Current opioid or stimulant dependence. Patients in the iCBT condition will receive weekly or twice weekly group sessions for 12 months. iCBT follows a treatment manual developed by Perivoliotis, Grant, & Beck. The manual details the approach (engagement, behavioral activation, cognitive remediation/restructuring, maintenance) and individualized treatment planning. It also describes strategies and techniques to deal with positive and negative symptoms, mood symptoms, and suicidality. It incorporates cognitive remediation strategies.33 Patients assigned to PE will receive weekly or twice weekly group sessions for 12 months. PE follows an evidence-based model already being delivered at the PVAMC. Patients in both conditions will participate in the existing SE program at PVAMC. All participants will continue to receive any services (medical, psychiatric, case management) they were already receiving. The primary outcome measure will be the total score on the Work Behavior Inventory (WBI) at the end of treatment. Secondary outcomes measures will be total score of the WBI at follow up and the total score on the Specific Levels of Functioning inventory (SLOF) measured at post-treatment and 6 month follow-up.